How to Claim Tax-Free Threshold Australia

2012-2013 Tax-Free Threshold Australia

The tax-free threshold has more than tripled to $18,200 since 2011-2012.

Australia’s progressive tax code is divided into five different income brackets, each with its own tax rate.

The tax rate of the lowest income bracket, that which falls between taxable incomes of $0 and $18,200, has a tax rate of 0%.

This means that you only pay tax on the income that falls above this lowest bracket. If all of your income is within this first bracket, you pay no tax at all. And even if your total income falls into a higher bracket, you still pay no tax on the first $18,200 of your income.

Save $5 On Your 2014 Tax Return When you factor in the Low Income Tax Offset (LITO), you can earn up to $20,542 without paying any tax.

The $18,200 upper limit of the lowest bracket is what’s known as the tax-free threshold, because the first $18,200 of your income is not taxed.

Recent changes

Compared to the 2011-2012 tax-free threshold of $6,000, the 2014 tax-free threshold of $18,200 has more than tripled. The increase, announced by the Gillard Government on 10 July 2011, is part of the Clean Energy Future package that brought the carbon tax to Australia.

How to Claim tax-free threshold Australia

When you claim the tax-free threshold, you reduce the amount of tax withheld from your wages over the course of the year. In terms of PAYG withholding, claiming the tax-free threshold can amount to an extra

  • $350 per week
  • $700 per fortnight
  • $1,517 per month

If you are an Australian resident for tax purposes, you must let your payer (including Centrelink) know that you wish to claim the tax-free threshold by marking “Yes” when you fill out your Tax file number declaration. If you have more than one payer, it’s generally best to claim the tax-free threshold from the one that pays you the most.

Part-year residents

Not everyone gets to claim the full tax-free threshold of $18,200, including those who

  • entered Australia permanently during the year
  • left Australia permanently during the year, and
  • are not an Australian resident for tax purposes

The tax-free threshold is just one of the many benefits you can take advantage of when you lodge your return. Take advantage of E-Lodge to make sure you maximise your refund.

It’s Easier With E-Lodge™

Photo via adesigna on Flickr.

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87 Responses to “How to Claim Tax-Free Threshold Australia”

  1. Darren edmondson says:

    Hi I’m tiring to do my daughters tax return she just started to work this year so this is her first return she has not need to pay any tax us she doesn’t earn enough when I tried to send it wouldn’t send. Regards Darren

  2. Tax Advisor says:

    Hi Darren,

    This tool from the ATO might be helpful for figuring out if your daughter needs to lodge a tax return:

  3. Astrid Harris says:

    At the end of the year I made roughly $11000 from one employer and had the tax free threshold for this job… What percentage of that should have been taken out for tax?? I only had $800 tax witheld and this seems to me to be too low.

  4. Tax Advisor says:

    Hi Astrid,

    It depends on whether you’re a resident for tax purposes or not. If you are a resident, you actually won’t end up owing any money on that income because it’s all below the tax-free threshold.

  5. Glenda says:

    Hi, I’m currently studying full time and I work 2 casual jobs. Am I able to claim the tax free threshold from both employers if my income is still less than $18,200?

  6. Tax Advisor says:

    Hi Glenda,

    If you are certain your total income for the year will be less than $18,200 you can claim the tax-free threshold from each payer.

  7. Tanya says:

    Can I change it if I ticked the no tax free threshold box once the new financial year has started. What would my employer need to do ?

  8. Tax Advisor says:

    Hi Tanya,

    You should fill out a new Tax file number declaration and give it to your employer.

  9. Nadia says:

    Hi I paid $36278 tax from one employer and $4846 tax from another employer,what do recon I do or do you think I will get any money back??

  10. Tax Advisor says:

    Hi Nadia,

    You should use our tax calculator:

  11. Alex says:

    Hi I earned approximately $24,700 in this finacial year with $1300 in tax taken out, but Etax is estimating my return to be approximately $150. How is it that I will get so little back this year even though I applied for the tax free threshold when I obtained my TFN? Was I meant to apply for it in every consecutive year?

  12. Tax Advisor says:

    Hi Alex,

    That refund amount is taking into account the tax-free threshold. The amount of your income that was over the tax-free threshold was $6,500. That means you owe 19% of this amount in taxes. That adds up to $1,235, just barely less than was withheld. The only way to increase your refund would be to reduce your taxable income with deductions or reduce your tax liability with offsets.

  13. Jamie says:

    My daughter would be lucky to make $4000 a yr at her part time job . Would she claim the tax free threshold ?

  14. Tax Advisor says:

    Hi Jamie,

    If that employer is your daughter’s only payer then yes, she should definitely claim the tax-free threshold and she won’t owe any tax on that income.

  15. Anthony says:

    i get taxed a lot. $9000 in the first year and $14000 in the second. i got back $5000 and around $7000 for those years. did i fill in anything wrong for the tax free threshold and if so does it affect how much child support i am paying?

  16. Tax Advisor says:

    Hi Anthony,

    I can’t say if you filled in anything incorrectly with the tax-free threshold. Both of those refund amounts seem really high though. Ideally, you want your refund to be as close to $0 as possible, so that you can spend that money over the course of the year. Are you sure that you have claimed the tax-free threshold from one of your payers? Not claiming it could explain the high amounts withheld.

  17. Gail says:

    Hi I am 64 years old and work as a retail assistant earning between $350.00 and $400 a week do I have to pay tax on that

  18. Tax Advisor says:

    Hi Gail,

    You will only have to pay tax on your income if it is greater than $18,200, which is the tax-free threshold. To find out if you have to lodge a return, use this tool on the ATO website:

  19. Jorge says:

    Hi, the deadline to lodge the tax return is 31st.of October 2013 but if it is prepared by a tax advisor, when is the deadline to lodge it without penalties?
    Thanks and kind regards.

  20. Tax Advisor says:

    Hi Jorge,

    You should ask your tax agent what their late lodgement date it.

  21. Dotty says:

    Hi I wrk with 2of my friends.same hours.they both got 4000 tax return and I got 1200.why would tht b

  22. Tax Advisor says:

    Hi Dotty,

    You should talk to your tax return preparer. I can’t possibly know why that is.

  23. Nele says:

    I just lodged my tax return with a tax accountant in australia, i was there 2012/2013 for 10 months on a working holiday visa. I got the tax checklist back with the final numbers, and it says that my Estimated tax refund will be 91 Dollars. I am quite frustrated and concerned about that and would like some help and answers if that could even be possible? and if not, how can i claim my money back rightfully?

  24. Tax Advisor says:

    Hi Nele,

    Obviously I can’t really give you any information without knowing your situation in greater detail, but I can say that this likely comes down to an issue of residency. Did you lodge as a resident or a nonresident. Many nonresidents assume that they will get all of their tax back, but that’s not necessarily true. In fact, they generally pay a higher tax rate than residents as they cannot take advantage of the tax-free threshold.

  25. Christopher Esguerra says:


    My wife has 2 jobs, a part-time permanent and a casual. Based on your guidelines tax- free threshold should be claimed to the one you are earning most. But in my wife’s case she do not claim it in the job where she earn most and in the other job that she earns less she then claiming the tax free. Will there be a problem when she lodge the tax return? Combined earnings for those two jobs will be more than $18,200.

    Thank you

  26. Tax Advisor says:

    Hi Christopher,

    It should still be okay when she prepares her taxes. The ATO just recommends that you claim the threshold at the higher paying job because it makes your withholding closer to your overall tax liability. Claiming the threshold for the lower paying job may just mean that your refund/tax due is higher than it otherwise would have been.

  27. Margaret says:

    if you are a high income earner with total income of around $75,000 – $85,000 do you still qualify for the $18200.00 tax free threshold

  28. Margaret says:

    If you need to talk to someone in person regarding your tax who can you contact in Adelaide

  29. Tax Advisor says:

    Hi Margaret,

    All Australian residents can take advantage of the tax-free threshold – it is built into the tax rates themselves.

  30. Tax Advisor says:

    Hi Margaret,

    If you are lodging your taxes with E-Lodge you can speak to our accountants by phoning 03 5174 0961 Monday – Friday 10:00 AM – 4:00 PM AEST.

  31. caroline says:

    hi im starting to partime jobs will be working around 22 hours in each job what do i tick when filling out my tax form i am a resident for tax? will i be paying a lot in tax for the second job?

  32. Tax Advisor says:

    Hi Caroline,

    You need to fill in all of the income information for each of your jobs. If you are preparing your taxes through E-Lodge, there will be an opportunity to enter two different jobs.

  33. gizzard says:

    I have virtually no income. My partner (not de facto) is in a higher income bracket. They have a large amount of money in savings. Can they gift me the money into an account that I own so that the interest is part of my income in the tax-free threshold? I’m assuming that if I was to gift any interest earnings back then this would be considered tax avoidance on their part.

  34. Amina says:

    Hi. I am a resident for tax purposes. My gross income per fornight is around $3200 and the tax witheld is always 24% and I only have 1 employer. Is this right? I am supposed to have this much deduction evry forfnight? On the previous financial year my annual gross income was 63,000 and I only got 1500 tax refund. I was on a working visa that time. Does the tax witheld change when you become a Permanent resident. As I just got my residency lately. Thank you.

  35. Tax Advisor says:

    Hi Amina,

    Yes, the amount of tax withheld should change when you become a resident for tax purposes, as residents and nonresidents are taxed at different rates. To figure out if your tax withheld is correct, you can try using these calculators on the ATO website:

  36. gizzard says:

    Hi Tax Advisor
    Are you able to comment on my query of 15 October? If not through the web page then by email?


  37. Lenore says:

    Hi there, I was on the disability support pension for the last 12 months. ($18857.00) I earned $1,737.00 from a part time job (with $70.00 tax withheld) , $400.00 for being a movie extra and $920.00 for some small sewing jobs. I was told that the disability pension is non taxable income , and that I don’t need to put in a tax return this year because the rest of my income is way under the limit……. Is this correct?

  38. Tax Advisor says:

    Hi Lenore,

    I suggest using the ATO’s online Do I need to lodge a tax return? tool –

  39. Mike says:

    Gizzard asked you a question that I too would like to know the answer. Are you able to provide one? It could be really useful to me.

  40. Gaye says:

    My 15 year old daughter has just started working partite at KFC and they are taking tax out is that right she earned $82.82 gross and paid $17 is that right cheers Gaye

  41. Tax Advisor says:

    Hi Gaye,
    It depends. The employer is the one who decides how much tax to withhold based on information provided on the Tax file number declaration and withholding declaration. Here is a link to a more in depth answer to this question on the ATO website.

  42. Douglass says:

    I’m a self funded business owner/manager. If I earn less than the tax free threshold, should I still have to pay child support?

  43. Tax Advisor says:

    Hi Douglass,
    It depends. To find out, you will have to go to the Payment estimator on the ATO’s website. Here is the link;

    Simply fill in your information and you will find out if you need to pay child support and if so, how much.

  44. saranga says:

    Hi. I am a PR holder in Australia & 1st time I came in 2009 & stayed for 2 weeks. Hope to come in 2014 & settle down permanently. I would like to am I residence for tax purposes at present? Also would like to know is my worldwide income now I am earning is going to be taxed?

  45. Tax Advisor says:

    Generally, the rule is you have to be a resident of Australia for 6 months to be considered a resident for tax purposes. This link to the ATO website may help you with your question.,-income—tax-returns/What-is-the-tax-free-threshold-/

  46. Andrea says:

    I have just started casual work. With the tax free threshold does that mean no tax should be taken out until I have earned the $18200.00. I’m really confused on how this all works. I have been employed now for 4 weeks. My first 2 pays I earned roughly $630.00 and was taxed approximately $65.00 on each pay. My 3rd pay I earned $368.00 and was taxed $4.00 and then my last pay I earned $659.00 and I think it was $72.00 that was taken out for tax. Should I be taxed this amount if I requested the tax free threshold or am I wrong in thinking no tax is taken out at all until I have earned the $18200.00. Also can’t understand hy I was only taxed the $4.00 on my 3rd pay. I know I only earned half the amount of the other 3 but the way my employer has been taxing me it doesn’t make sense to me that it was only $4.00 compared to te others. Any help would be greatly appreciated.

  47. Tax Advisor says:

    Hi Andrea,
    When you file your taxes, you will report the income you are receiving for the year. Since you have been paying taxes out of your paycheck then you’ll most likely receive a tax refund when lodging from the ATO.

    I would ask your employer about the varying amount of money being taken out from your check. It should be somewhat consistant.

  48. Andrea says:

    Thank you so much for your very quick reply. You have been really helpful.

  49. chris says:

    Hi I just Stared my new job as a casual, I got paid $707 and taxed $197 over 21hs of work, just wondering why it’s so high?But i have another job I work once a week and hardly get taxed.

  50. Tax Advisor says:

    Hi Chris,
    Hi Chris,
    It depends on how much you are making. How many days a week do you work at the job where you make $707? The job where you work once a week is not withholding any amount, and the other job is.

    It many situations, the primary job, the withholding tax rate is lower because of the existence of a tax-free threshold. All other work has tax withheld based on a rate that excludes the tax-free threshold. However, it all depends on how much you are making. If you have taxes withhold that should not be withhold, you will end up getting a tax refund when lodging your taxes.

  51. Elaine W says:

    Hi there, I hold a 457 visa and currently a housewife. I am thinking of looking for a part time/casual job. Will I be taxed if I earn says $300 a week? How does the tax works for 457 visa holder on part time job? Please advise. Many thanks.

  52. Tax Advisor says:

    Hi Elaine,
    It will depend on if you are considered an Australian resident for tax purposes or not. This link to the ATO’s website will help you determine if you are considered a resident for tax purposes; Residency for tax purposes is not the same as citizenship. If you are a resident for tax purposes, you can take advantage of the tax-free threshold, meaning the first $18,200 of your yearly income is not taxed.

  53. John says:

    I am currently working as a casual earning 45,000 before tax and claiming the tax free freshold. I am thinking of taking up a second casual job that would have me earning 15,000 before tax. How much tax would i have to pay on the new job?

  54. Tax Advisor says:

    Hi John,
    For individuals earning between $37,0001 and $80,000, the tax rate is $3,572 plus 32.5% on everything you earned over $37,000. That means for the two jobs you would pay around $11,000 in taxes. For the second job alone, taxes would be around $4875 (if you consider you are paying 32.5%).

  55. Mary says:

    Hi there, just got a permanent job recently. In my tax declaration i ticked No in question “do you want to claim tax free threshold”. And tax deduction from my pay is too high. Like if my gross is $1,928 in a fortnight including overtime, i pay tax for $570. Is that right or should i get a refund when i file my tax at the end of financial year? Thank you.

  56. Tax Advisor says:

    Hi Mary,
    Great question. You will most likely receive a refund for the tax deducted from your pay, when filing your taxes (up to the income threshold). You’ll be granted this refund as long as you remember to indicate you are an Australian resident for tax purposes when filing.

    Australian residents for tax purposes can take advantage of the tax free threshold which means the first $18,200 of their income is not taxed. That means, for the tax taken out of your taxes, you will be refunded for on your tax return, up to your first $18,200 of income.

  57. Victoria says:

    Hi, I just started a new full time job and I need to fill in the part about the tax free threshold. Do you tick yes or no? I ticked yes and the boss is saying this is wrong and I have to say no. Can you please advise what I should put.

  58. Tax Advisor says:

    Hi Victoria,
    It’s up to you. Australian residents can take advantage of the tax free threshold , the first $18,200 of your yearly income is not taxed. If you pick “yes” then the first $18,200 of your income will not be taxed from your paychecks. However, if you click no, then you will be taxed much more from your paychecks and later when lodging your taxes, will receive a refund on the tax you paid and not required to pay.

  59. Ksk says:

    I hold a 457 visa and am intended to stay for more than a year here on my full time employment. Have checked the link in this blog and am satisfying “Resident of Australia for Tax purpose”. I have started employment in February, am I eligible for entire $18,200 threshold?

    Also, I have dependant spouse(not working) and kid. Am i eligible for claim family tax benefit or dependant spouse benefit?

  60. Jason says:

    Hi I am on a 457 visa and have paid 11000 in tax to date. Friends have told me that I will get all the tax back but this does not sound correct to me. Just wondering if this is true

  61. Ben says:

    Hi, if Im under 18 and work part time and earn over $18,200 a year and pay 31.5c to the dollar (after the employer equating my annual pay would fall into that tax bracket), will I get roughly the one-third of taxable income under the tax free threshold back?

  62. Tax Advisor says:

    Hi Ben,
    It depends on how much your total income is. I would suggest learning more about how income on individuals under 18 on the following ATO page;

  63. Tax Advisor says:

    Hi Jason,
    When lodging your taxes, keep in mind that generally if you’re in Australian working and living for at least six months, you’re considered a resident for tax purposes. If this is the case, you’ll be able to claim the tax-free threshold meaning the first $18,200 of your income is not taxed. In that case, any extra tax you have paid will result in a tax refund when lodging your taxes.

  64. sheila says:

    Hello. This is my first time filling a tax. Well actually 2nd time. I moved here last year on 1st June, and lodge a tax return for that one month. I got back the while amount which was just $780, this year I have made more than $50000 in my income and my tax is somewhere $13000 that was cut from the whole year. I am on a 457 temporary visa. I am not sure if I had checked yes for the tax free threshold on the TFN declaration. I am not sure if I will get it or not. I have been told that I will get back the first $6000 of my wages. Confused here. How much do you think I will get back? Do I mark yes on I am a Australian resident for tax purposes? Thanks.

  65. Kris says:

    Dear Tax Adviser,
    2 years ago when I started a new job, by mistake I answerd “No” to the question if I want to claim the tax-free threshold from this payer, dispate I was eligible to do so. I didn’t realise my mistake (I’m doing my tax returns by myself) until now.
    Is it possible and how I could recover that money?

  66. Tax Advisor says:

    Hi Sheila,

    You may want to refer to our Tax Calculator. This will give you a fair estimate once you enter your information into the six provided fields.

  67. Tax Advisor says:

    Hi Kris,

    You will most likely (or already did) receive a refund for the tax deducted from your pay, when lodging your taxes (up to the income threshold). You’ll be granted this refund as long as you remember to indicate you are an Australian resident for tax purposes when filing.

    Australian residents for tax purposes can take advantage of the tax free threshold which means the first $18,200 of their income is not taxed. That means, for the tax taken out of your taxes, you will be refunded for on your tax return, up to your first $18,200 of income.

  68. Craig says:

    Hi Tax Advisor,

    I’m on a 457 visa (which i believe is permanent resident for tax purposes), on my certificate this year and last payslip for the year, it indicates my full gross for the year was taxable. (around 80,000 for the year and I have paid tax around 20,000). Does this mean i can claim my tax back from the first 18,200 of my gross pay? If so, do I need to indicate this to the tax agent I use? Is it possible to claim for previous tax years at this point?

    If this isn’t the case, can you explain why please? As it appears to me that I have paid tax on my whole gross pay and I doesn’t appear like I have received my tax free threshold.

  69. Tax Advisor says:

    Hi Craig,

    I suggest taking a look at the Australian Government website for further information about temporary work visas (subclass 457). There is also contact information on that website in case the information they have provided does not answer all of your questions.

  70. Martha says:

    Dear Tax Advisor,

    I am a resident for tax purpose. In this (2014-2015) tax year I am about to have gross income $39,520 annualy. Is it more beneficial to claim tax-free threshold or not. If I claim tax-free threshold will I be obligated to pay anything at the end of tax year or after $18,200 the tax will automatically increase? And also could I change tax-free threshold claim by completing the ‘Withholding declaration’ if I said ‘No’ on Taxation Declaration form?

  71. Tax Advisor says:

    Hi Martha,

    I suggest taking a look at the “Tax-Free Threshold” information page on the ATO’s website. This gives a detailed guide that should answer your questions.

  72. Branden says:

    Hi there,

    My wife did not earn anything this year at all. She just received the Private Health Insurance Statement of which she was under my name with Medibank – I however did not claim this when I lodged my tax return.
    Does she have to complete a tax return to put the health insurance info on it or does she not have to complete a tax return because of the no income earned?

    Also should I have claimed her as a dependant considering she earned no income? She is not a student or sick or anything of the sort and we are both 22yrs of age.


  73. Tax Advisor says:

    Hi Branden,

    I suggest taking a look at the ATO’s tool to find out if you need to lodge a tax return. This tool only takes a few minutes to complete and will give you the best decision based on the information you provide.

    Also, the ATO has specific rules and regulations for who qualifies as a dependent for tax purposes. This is based on several different factors including their income, how much you help them with living expenses, etc.

  74. Katrina says:

    I am permanently employed by the DEC as a teacher and am currently working part time . I have been doing casual teaching at the same school but getting taxed as a second job. This doesn’t seem fair as it is the same job. Is this correct?

  75. Tax Advisor says:

    Hi Katrina,

    You may want to speak with your payroll department about this specific issue.

  76. Beatrice says:

    Hi Tax Advisor
    My salary is $55,000 a year (for half of the past financial year my salary was $50,000) , I have a HELP debt and get paid monthly. Every month when I get my payslip I make sure the correct amount of tax is being taken out by checking on the ATO’s tax witheld calculator and it is always correct.

    I have just done my tax return and have been told I need to repay $1000. Would you be able to explain to me why? I don’t understand when every month I am paying the exact tax amount the ATO is advising for my income and HELP debt, yet I now have to pay more?

    Thanks so much

  77. Tax Advisor says:

    Hi Beatrice,

    I suggest contacting the ATO since it seems that they have not advised you correctly.

  78. Matt says:

    hi there, i earnt $13212 and paid $2383 in tax, i left the country part way through the tax year. am i able to claim any of the tax paid back? would the tax free threshold apply?
    i appreciate your thoughts.

  79. Tax Advisor says:

    Hi Matt,

    Please take a look at the ATO’s guide for claiming the tax-free threshold.

  80. Charlie says:

    Hi, I am currently working 2 jobs, I’m earning 35000 gross a year for my first job and 4800 for the second one. I just want to know if I need to pay tax for my part time (second) job? And if I will receive tax refund at the end of the year?

  81. Tax Advisor says:

    Hi Charlie,

    I suggest taking a look at the ATO website where they discuss the tax-free threshold amounts and requirements for individuals.

  82. Joanne says:

    Dear Tax Advisor,
    I’m so frustrated, can you explain why tax withheld from my employer is correct (have checked against fortnightly tax table – incorporating Medicare levy) yet on my notice of assessment an additional levy of $1081.30 is added. I have private health insurance, and all very similar to last year, with a $400+ return. Phoned ATO, not sure? Not enough tax withheld ? Pay offices (local & head) checked, they say correct tax withheld ! So why $940 tax debt ? Have to pay by 1 December, just want to know why, & do I need to get more withheld & why??

  83. diakko santaali says:

    i just start working in australia and this is my first year of working in here unfortunately i did not know many things and i was getting pay from the centrelink also but i just stopped that and i reported that i got a job and i stopped getting pay from them so my question is do i take back all i payed as tax in the first year of starting work in australia?

  84. cynthia says:

    Hi. Just started my job and I’ve realized after my first pay I’ve ticked no to the tax free threshold instead of yes. Can I change this and is there a way to get the money back?

  85. Tax Advisor says:

    Hi Joanne,

    That is extremely frustrating. I suggest using the ATO Tax Withheld Calculator to see the amount that should be withheld. Once you have this amount, I suggest speaking with your payroll department about the situation. They may be able to offer a bit more detailed information about your specific situation.

  86. lauren says:

    If work a full time job and earn $37000 a year and then work weekends (saturday at a casual job) will i be taxed 50%

  87. Tax Advisor says:

    Hi Cynthia,

    You must let your payer (including Centrelink) know that you wish to not claim the tax-free threshold on your TFN declaration. They will then be able to tell you how to proceed.

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